Age

Buying life insurance as a 30-year-old

21 May 2019

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Get ahead of the life insurance game by applying when the rates are still low.

Your 30s are a decade of discovery: You might be climbing the career ladder, getting married, starting a family and buying a home. You may also be thinking of starting your own business. Before you launch into your 30s, it’s a good idea to explore life insurance.

While you’re young, life insurance is incredibly affordable — and as a healthy 30-year-old, you may still have access to most providers’ preferred rates. Forward thinking pays off: You’ll not only lock in a low premium, but you may be able to opt for higher coverage for just a few extra dollars a month.

Life insurance goes hand-in-hand with financial planning. Even if you don’t have any major financial obligations now, you can start putting some money aside to protect you or your family when issues arise.

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Which is the cheapest life insurance provider for 30-year-olds?

Let’s use a 20-year term life policy with $250,000 of coverage as an example. According to our research, the cheapest life insurance provider for a 30-year-old nonsmoking man might be Protective Life at $13.12 a month. The rates for a smoker are a little higher — William Penn and Banner Life tend to be the most inexpensive options, charging $39.77 a month.

For a 30-year-old nonsmoking woman, William Penn and Banner Life are among the cheapest providers at $11.74 a month, according to our research. They also offer low rates for smokers, with coverage at $32.03 a month.

Monthly costs of a 20-year, $500,000 term life policy for a 30-year-old in great health

What is my risk of dying in the next five years?

As a typical, healthy 30-year-old, it’s safe to assume you’ll live a long life. Based on our US life expectancy data, the risk of dying within the next five years stands at 0.79% for men and 0.38% for women.

To put this into context, a man who reaches the age of 65 can expect to live until 84.3, while a woman can expect to reach 86.6. These numbers are averages — about a quarter of 65-year-olds will live past age 90.

Though life insurers put a huge emphasis on age when they’re underwriting policies, at 30, you’re still in the sweet spot. It’s much less risky for a provider to cover you now than it is in 5, 10 or 15 years.

Odds of dying for a 30-year-old

Within the next…

Male

Female

Year

0.15%

0.07%

5 years

0.79%

0.38%

10 years

1.71%

0.92%

20 years

4.72%

2.89%

30 years

11.73%

7.32%

Life expectancy rates are merely calculations based on averages of mortality among specific population, gender and age groups. They do not predict the specific life expectancy of any one person - including you. If you're concerned about your overall health and risks, talk to your doctor or health professional.

What is the typical cost of life insurance for 30-year-olds?

There’s nothing more personal than life insurance, and the rates vary depending on your age, health, lifestyle, occupation and family history. That being said, there are many benefits that come with signing up early, such as qualifying for low, preferred rates.

Our research suggests that the average cost of a $500,000, 20-year term policy for a nonsmoking man in perfect health is around $22.93 a month. Over 20 years, this adds up to $5,503.54, with an expected value of $23,620.14.

For that same amount of coverage for a nonsmoking woman, the average cost tends to be around $19.56 a month. This totals $4,694.06 over the life of the policy, with an expected value of $14,433.96.

What is expected value and how is it determined?

The expected value (EV) of a life insurance policy is the anticipated value based on the odds that you’ll die and your death benefit is paid out. You can find the expected value by multiplying the probability of you dying by the payout of the policy. If the expected value is higher than the total cost of the policy over the term length, then it may be considered a good investment. However, if the expected value is less than the total amount you’ll pay into the policy throughout the term, then you may want to look at other providers or alternatives to life insurance.

Let’s look at an example. Say you’re a 50-year-old nonsmoker who’s thinking about taking out a 20-year term life policy for $500,000 at $79.88 a month. As a man, you have a 20.97% chance of dying within the next 20 years, so you multiply that by $500,000 to get an expected value of $104,859.38. Since the total cost of your policy over 20 years adds up to $19,171.89 — less than the expected value — then your life insurance policy may be considered a good investment for the future.

What is the best life insurance policy for 30-year-olds?

The short answer: It depends on your situation.

To simply protect your family and give yourself peace of mind, consider term life insurance. It’s the cheapest type of insurance on the market and a common choice for 30-year-olds. Term insurance provides coverage for a fixed period, usually 10, 20 or 30 years. If you die during that time, your beneficiary gets your policy’s death benefit, which they can then use to cover the costs of your funeral, pay off your debts and maintain their lifestyle.

Typically, life insurance carriers offer low premiums to 30-year-olds. The reasoning behind this isn’t subtle: You’re young, so the odds of you outliving your policy are high. That means your life insurance provider probably won’t have to pay out your policy. In other words, you’re not a risk to their bottom line, but a term life policy will take care of your loved ones if you die unexpectedly.

For many 30-year-olds, it’s the most affordable option. Plus, the premium doesn’t change, so you know exactly how much you’ll be paying every month.

If life insurance is a major part of your financial plan, you might want to explore a permanent policy, like whole life. This type of policy typically costs two to four times more than term life, but most 30-year-olds can still access low, preferred rates. It also accumulates cash value, making it more of an investment option. Once you build up sufficient cash value, you can take out loans against your own policy — with interest — to cover a wedding, down payment and so on. The policy doesn’t expire as long as you make your payments, and when you die, your beneficiary receivez a death benefit along with an added cash value benefit.

While there usually isn’t a huge price difference between term and permanent life insurance at this age, the policy you choose comes down to your unique needs, budget and financial plan.

How much life insurance do I need around age 30?

To figure out how much life insurance to buy, carefully consider your financial needs now and in the near future. Think about the following: Student loans, existing debts, and anyone who might rely on your income should you pass away prematurely. To help determine these needs please feel free to check out our life insurance calculator.

It’s a good idea to review your coverage as your circumstances change. Say you upgrade your home, have a child or get a hefty raise — you’ll want to be sure your life insurance policy accounts for that.

Case study

If you found yourself nodding “yes” to a few of the points above, it’s worth looking at higher coverage. At age 30, the difference between $250,000 and $500,000 or $1 million in coverage is typically $10 or less.

Let’s look at a 30-year-old nonsmoking man. Based on our research, one of the cheapest life insurance providers is Protective Life, which tends to charge $13.12 a month for a $250,000, 20-year term policy. For a $500,000 policy, that same insurer might offer a rate of $20.21 — a price difference of $7.09 for double the coverage. And if he wants to go even further and buy life insurance for $1 million, it increases to around $33.97 a month.

Bottom line

For many 30-year-olds, there’s a question mark over the future. They’re working their way up the career ladder, and marriage, houses, children and businesses may be a reality or on their mind. All of those things are huge financial responsibilities, and the sooner you start planning for them, the better off you — and your bank account — will be in the future.

When you’re young and healthy, you can usually score life insurance at a cheap rate. For most types of policies, that rate doesn’t change, meaning you can be covered for a low cost throughout much of your working life.

You may not know what the future holds, but life insurance can help you to prepare for it financially. However, it’s still an expense, so be sure to compare policies with our guide to life insurance.

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Frequently asked questions

No, the premium you pay every month is not tax deductible. Learn more about the tax implications of life insurance if you’re an individual, self employed, own an LLC and more.

Life insurance death benefits are usually not subject to income tax. However, there are a few exceptions to the rule when you start dealing with interest earned on payout benefits or profit from surrendering a cash value policy. Learn more about what you can expect as far as taxes on your payout — and a few key situations exempted from tax-free status.

Health insurance helps to cover your medical expenses if you become sick or injured. It doesn’t pay for the debts, bills and loss of income if you can’t work as a result, which is where life insurance steps in. Life insurance also provides your family with financial support when you’re gone, whereas your health insurance policy dies with you.

If you’re on a budget, consider term life insurance. The premiums tend to be cheaper, and many policies are convertible, meaning you have the option to switch to a permanent policy later on. To lock in a low premium, compare life insurance policies. As a healthy 30-year-old, you’re likely to have access to many providers’ preferred rates. Lastly, life insurance becomes more expensive as you age, so if you’re hoping to save money, look into policies while you’re young.

Katia is a freelance writer from sunny Sydney, Australia. Her writing — and curiosity — has taken her around the world, and she now calls chaotic, creative New York home. She navigates insurance and finance for Finder, so you can splash your cash smartly (and be a pro when the subject pops up at dinner parties).

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